Nordman v. Rau

The opinion of the court was delivered by Mason, J.: Johanne Nordman brought an action, to enforce her rights as to a tract of land under a mortgage given by Jacob Rau. S. A. Webb, a defendant,, claimed to -be the absolute owner of the land as an innocent purchaser without notice of the mortgage. Findings of fact were made to the effect that the mortgage was executed and in fact recorded in the office of [20] the register of deeds of the county where the land was situated, but was never acknowledged; that while matters were in this situation a personal judgment was rendered against Rau, an execution was issued and levied on the land as his property, and it was sold to Webb at a sheriff’s sale, which was duly confirmed, and under which a deed was subsequently made to him; that the resident attorney who acted for Webb in bidding in the land at the sheriff’s sale, knew of the existence and contents of the record of the unacknowledged mortgage. The trial court gave judgment for the owner of the mortgage, holding it to be valid as to Webb because his agent knew of the actual state of the record. Webb appeals. The appellant argues that inasmuch as the attorney who bid in the land for Webb represented him only in that particular transaction and had no other connection with him, the knowledge of the agent was not equivalent to the knowledge of the principal. It fairly appears, however, that the attorney gained his knowledge of the state of the record after having been employed to attend the sale, and before bidding in the property, and that in this aspect of the matter the case falls within the rule that “a principal is . . . affected with-knowledge of all material facts of which the agent receives notice or acquires knowledge while acting in the course of his employment.” (31 Cyc. 1587.) A purchaser at a sheriff’s sale is entitled to the protection of the recording act. (Lee v. Bermingham, 30 Kan. 312, 1 Pac. 73; Note, 21 L. R. A. 33.) It is therefore necessary to decide whether an unacknowledged mortgage, which has been copied into the record book of the register of deeds, is void against one who buys the property knowing the contents of the record, but is otherwise an innocent purchaser for value. An instrument affecting real estate is entitled to record only when it has been acknowledged or proved as provided by the statute. And where such an instru [21] ment is recorded without having been so acknowledged' or proved, the record does not. impart notice to anyone. (Wickersham v. Chicago Zinc Co., 18 Kan. 481; Wiscomb v. Cubberly, 51 Kan. 580, 589, 33 Pac. 320.) The statute relating to the effect of a failure to record instruments affecting real estate reads: “No such instrument in writing shall be valid, except between the parties thereto, and such as have actual notice thereof, until the same shall be deposited' with the register of deeds for record.” (Gen. Stat. 1868, ch. 22, § 21, Gen. Stat. 1909, § 1672.) The precise question involved is whether one who-has seen and read in the records in the office of the register of deeds what is in fact a copy of an existing unacknowledged instrument is to be regarded as having-“actual notice” of the instrument itself, within the meaning of the. statute. In Massachusetts and in Indiana “actual notice” is interpreted as equivalent to-actual knowledge (Webb, Record of Title, § 222, p. 356, note 3), but the general rule is that evidence of' facts and circumstances sufficient to put upon inquiry amount to actual notice (Webb, Record of Title, § 222, p. 356, note 4)'. “Actual notice does not mean that, which in metaphysical strictness is actual in its nature, because it is seldom that ultimate facts can be communicated in a manner so direct and unequivocal as to exclude doubts as to their existence or authenticity. Actual notice means, among other things, knowledge of" facts and circumstances so pertinent in character as to-enable reasonably cautious and prudent persons to investigate and ascertain as to the ultimate facts.” (Pope v. Nichols, 61 Kan. 230, 236, 59 Pac. 257.) “Actual notice may be either express or implied; that is, it may consist of knowledge actually brought personally home, or it may consist of knowledge of facts, so informing that a reasonably cautious person would be led by them to the ultimate fact. . . . Actual notice is implied only when the known facts are suffi [22] ciently specific to impose the duty to investigate further, and when such facts furnish a natural clue to the ultimate fact.” (Faris v. Finnup, 84 Kan. 122, 124, 113 Pac. 407.) This -court is of the opinion (not shared by the writer) that one who has seen the record of an unacknowledged instrument is not deemed because of that fact to have actual notice of the instrument itself, upon these grounds: To charge him with such notice is to require him to assume, without proof and without competent evidence, that a valid conveyance is in existence corresponding to the unauthorized copy. If he is required to give any attention to the matter at all he may with equal or greater reason suppose the parties to have abandoned whatever intention they may have had to execute such a conveyance, from the fact that they failed to have a certificate of acknowledgment attached. To charge him with actual notice of the existence of a conveyance because he has seen a copy of it which, without legal authority, has been written in a book of public records, is essentially to give such copy the force of a valid record. To hold that the record of an unacknowledged conveyance, if known to a prospective buyer, amounts to actual notice of the instrument, is to compel him to give it force as evidence which the court itself would refuse it. This view is thus elaborated in Kerns v. Swope, (Pa. Supr. Ct. 1833) 2 Watts, 75: “The registration being without the authority of the law, was the unofficial act of the officer, which could give the copy no greater validity than the original deprived of legal evidence of execution; nor even so much, for an original deed exhibited to a purchaser would affect him though it were unaccompanied with the evidence of its execution. But here the registery was no better than a copy made by a private person in a memorandum book; from which a purchaser would be unable to determine whether there were, in fact, an indorsement on the deed, or whether it had been truly [23] copied — especially when neither the copy, nor an exemplification of it, would be legal evidence of the fact in a court of justice. Unquestionably a’ purchaser would not be affected by having seen the copy of a conveyance among the papers of another, or an abstract of it in a private book. The whole effect of a registry, whether as evidence of the original or as raising a legal presumption that the copy thus made equivalent to the original had been actually inspected by the party to be affected, is derived from the positive provisions of the law; and when unsustained by these, a registry can have no operation whatever. Stripped of artificial effect, it is but the written declaration of the person who was the officer at"the time, that he had seen a paper in the words of thé copy which purported to be an original. But to say nothing in this place of the incompetency of such a declaration as evidence of the fact, on what principle would a purchaser be bound to attend to the hearsay information of one who is not qualified to give it?” (p. 78.) The same view was indicated in Banister v. Fallis, 85 Kan. 320, 116 Pac. 822, where it was said of the record of an unacknowledged instrument: “The instrument itself, if there were one, had no validity except between the parties and those having actual notice, not of what was on record, but of the instrument itself.” (p.i 322.) The judgment is reversed and the cause remanded with directions to render judgment upon the findings quieting the title of Webb.